taxes – Page 11 – Hank Kalet

Governor should keep the pressure on

The Record pats the governor on the back today in an editorial — and with good reason. The governor has held off on signing the 20 percent tax credit into law as a “way of pressuring reluctant lawmakers into following through on substantive change.”

Lawmakers, of course, have been rather timid in their commitment to reform — “particularly in regard to dual office holding.”

But Corzine should continue to pressure lawmakers to make the ban on dual office holding complete. No grandfathering. The governor has the bully pulpit, and he should use it to get the public’s attention.

Almost 80 percent of New Jersey voters agree with Corzine. In a recent poll, they said state lawmakers should not be allowed to have another government job of any kind, elected or otherwise.

The governor’s vision of real change in New Jersey also includes pension and health care benefit reforms for all elected and appointed officials, not just public employees. It includes more transparency in political campaign contributions at all levels of government. Corzine wants to end pay-to-play and eliminate “wheeling,” the practice that both Democrats and Republicans use to evade campaign contribution limits by moving money from one part of the state to the other in general elections.

This is a vision that threatens the very heart of the state’s political power structure. But it’s what true reform is all about.

Let’s hope his pressure works and we get more than the lukewarm reforms currently being served.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here

Delay levy cap indefinitely

Gov. Jon Corzine has signed several of the Legislature’s tax reform proposals (if you want to call them that), but he’s yet to sign what Trenton has pegged as the most important of the measures — the bill that would create the 20 percent tax credits and impose a 4 percent levy cap on municipalities, schools and county governments.

The governor ostensibily is holding out for a ban on dual-office holding in New Jersey, but he should take the time to rethink the proposed levy cap and push the Legislature to find more efficient and effective ways to hold local spending down.

Spending an afternoon talking about the budget with South Brunswick school officials puts the levy cap in perspective. The cap, as Superintendent Gary McCartney points out, applies to the total amount to be raised by taxes — regardless of whether the tax base grows (new houses, new warehouss, etc), and regardless of whether enrollment grows or an unexpected major expense (roof repair, for instance) is needed.

About 80 percent of the budget is personnel costs — either salary or health and retirement benefits. The rest is a mix of facilities and supplies, including heat, electric and other utilities costs.

For the most part, the district has done a solid job in recent years of keeping spending increases to a minimum, adding staff only to keep teacher-student ratiosstatic, to man new buildings or to provide newly mandated programs.

But education is expensive — the average house with two children in school might generate $5,000 to $10,000 in school taxes but costs the district more than $20,000, a net loss. That means rising school taxes.

The new cap law attempts to control spending by attacking the sympton (rising taxes), without addressing its causes (among them single-source funding and not enough state financing, too many school districts) — setting limits without giving school districts, in particular, real tools to stay within the limits without slashing instructional programs.

It’s a prescription with the potential for way too many dangerous and debilitating side-effects. It needs to be changed.

South Brunswick Post , The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here

To sell or not to sell

Editorials in the state’s major papers over the last few days are asking that voters and legislators keep an open mind on the governor’s “asset monetization” proposal, asking that critics hold their fire until the governor puts a plan on the table.

The Record, for instance, calls legislators’ attempts to block the plan — essentially a privatization of state assets — premature and “flat-out wrong.”

They have decided they are dead set against the sale or lease of a major highway or other asset before they even know what the Corzine administration will come up with.

Their premature opposition is a disservice to the public. It threatens to kill the proposal for an asset sale before it has even been made.

Of course, that’s the game plan. The idea of selling off the Turnpike is dangerous at the very least, raising the specter of some unregulated business raising tolls and shirking on maintenance, leaving the state’s drivers holding the bag for years.

The Record admits that

there are serious, legitimate concerns about the notion of giving a private company control of any major highway or other state asset. Would tolls rise unreasonably high? Would the highway be properly maintained?

Most important, would an asset sale benefit the state over the long run, or would it bring only temporary relief that would lead the state into a deeper fiscal hole in the future?

These concerns need to be fully debated. But it is impossible to debate a proposal that doesn’t yet exist.

The Asbury Park Press also remains skeptical, but is open to some options,

such as the sale of naming rights and air rights — developing the empty space above state properties — and the use of financial techniques to generate regular income from state assets. None of the alternatives should involve ceding control over the assets, such as the roadways, which would hurt commuters most with nonstop toll increases.

And it wants voters to have the final say — which only seems reasonable, given what may end up being proposed.

Let’s be fair here. “Asset monetization” is a dangerous gamble, as I said. Handing off public assets, even if safeguards are built into the contract, means handing off control. You can’t have it both ways.

I wouldn’t take the proposal off the table, necessarily, but before anyone can take this discussion seriously, the governor has to show the state that there are no other options. The governor says that voters will not stand for an income tax hike. My answer is: Let’s ask them. He says they won’t stand for service cuts: Explain the potential cuts and then ask them whether they can live with them.

If, in the end, “asset monetarization” is the only way to stave off financial ruin, then we can talk about it.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here.

A dangerous infectionon the body politic

A very good investigative report in The Star-Ledger today asks the question: “Did ‘800-lb. gorillas’ sit on property tax reform?”

The story details the money spent by a variety of special interests to point the tax reform effort in directions that would benefit them, or at least not hurt them much.

Lobbying reports released yesterday show groups with the biggest stake in
property tax reform spent more than $1.9 million last year to influence lawmakers. At the same time, key legislators extracted nearly $569,000 in campaign contributions from the same groups.

Labor unions, the New Jersey Business and Industry Association, engineering firms — all tossed in quite a bit of change to stymie the reform efforts.

Which underscores an important reality. Real reform is unlikely unless we can reform the campaign finance system. The proposed clean elections pilot — a rather weak extension of 200’s badly flawed pilot — is not enough. A much more extensive pilot — covering at least six districts and including the primaries and third parties, as proposed by the clean elections committee — needs to be tried, with a promise of a full-legislative program being put in place by the next Assembly election.

Without it, all budgetary and tax reform efforts — along with needed consumer, environmental and labor reform legislation — will be hijacked by money.

Don’t believe me? Ask Matt Shapiro, an unpaid lobbyist for New Jersey’s 1 million tenants who was quoted in the Ledger story:

“Had we been a group that made large campaign contributions, we would have had more access,” Shapiro said. “We’ve had conversations, but we were not legitimately a part of that process.”

Any questions?

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here.

A boost in aid

Aid figures are out and it appears that the governor is keeping his word to suburban schools. South Brunswick is looking at a 5 percent increase ($20.16 million from $19.2 million), Monroe ($4.33 million from $4.2 million) and Cranbury 3 percent ($727,735 from $706,539) and Jamesburg a whopping 8.3 percent ($3.96 million from $3.66 million) — not huge increases by any stretch, but more than any hike in a long time.

While the aid increases should help offset the need for some property taxes, they remain far below what is necessary to help growing districts like Monroe and South Brunswick keep up with the particular intersection of enrollment hikes and inflation with which they must live.

Consider, however, that South Brunswick will be looking at a budget of something in the neighborhood of $125 million, meaning that state aid makes up just 15 percent of the total. The percentage in Cranbury is about 6 percent.

For the state to address the property tax problem, it will need to address this funding flaw. I don’t know what the correct number is, but if the state paid about half the cost of education in a district like South Brunswick, it would cut between 50 and 60 cents off a $2-plus tax rate. The same kind of percentage cuts would be felt across the state.

That said, the state would need to come up with the money for the aid — either by raising taxes or through some other creative, but sustainable way of raising revenue.

I don’t know if this is the correct approach, but it a drastic approach, a wholesale revision of the way we do business as opposed to the nibbling at the edges envisioned by the four joint committees.

South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
The Cranbury Press Blog

E-mail me by clicking here.